Investing in small town


I’m looking at a park that’s located in a town with about 20,000 population. The population growth is about 1%

but the unemployment rate is very strong (6.5%). The economy seems quite strong in the town and it does have

a Super Walmart. Would this be a decent town to consider?

I’d say yes. As long as you are proximate to a SuperWalmart, the economy should be at least decent.

That said, and in addition to the statistics you cite above, I also pay close attention to the vacancy rate (should be in the single digits), and the percentage of housing that is available for rental (should be less than the national average of 31%). All this information is available on, and Frank & Dave’s books outline what to look for as you complete your due diligence.

Ultimately, a park’s risk can be compensated for by a lower price. My perspective is “there are no bad deals, there are only bad prices to pay.” So a tertiary market like you describe might ‘only’ be worth a 12% -14% cap rate (land only, no house income included). Then again, tertiary markets tend to have less-sophisticated Mom-n-Pop operators, and maybe the lot rents are 30% below market, and they are not billing for water, and then maybe it is a 10-cap, only because it will be so easy to turn it into a 20-cap in 60 days.



Yes. I live in a small town and it’s a population of 4,500 – that’s the kind of size a “small town” is. And even at 4,500, we have a hospital, private school, public school, and a diverse number of employers. 20,000 is much more than a small town. The Super Walmart is a huge plus and a positive affirmation that the area has a solid future. Don’t be too alarmed by low population growth numbers, as that has a lot to do with demographics and size of households. Unless you have huge numbers of kids being born, it is fairly standard for the size of households to be declining by kids going to college or moving on, and mortality. Imagine the lifestyle of an average family that is being measured. Two adults have two kids, and the population of that household doubles. Then the two kids grow up and go out on their own, and the population plunges 50%, even though the economic occupancy of that house does not change during the whole time. Unemployment rate is a much more important statistic, and it sounds like it is in good order in your proposed market.

Obviously, you have to do complete diligence on the market. A test ad is going to be hugely important when you get into smaller population sizes, just to test the vitality of the market and the demand for affordable housing. But nothing you are saying is turning me off.

Thank you for your input JL. Would you say that $200.00 to install a meter for each lot would be a reasonable budget?

Frank, would you say that Craigslist ad under “Apt/housing” would be a good place to post a test ad?

Would you place an ad for just lot rent or for lot & mobile home rent?


Yes, $200/meter for parts and labor is reasonable. That’ll get you one of the ‘regular’ (e.g. not wireless remote-read) meters. is always a good place to find new and used meters at reasonable prices.

To your continued success,